The code of practice states that banks should have strong governance around tax, which is integrated into their business decision-making.

They should follow the spirit of the law in addition to the letter – this means banks can undertake tax planning to support their business operations, but this should not be used to achieve tax results that are contrary to the intentions of Parliament.

HMRC and the banks should work together to encourage mutually open and transparent relationships.

Chancellor of the exchequer George Osborne says: “A year ago, the previous government announced that it would require banks to sign up to the Code of Practice on Taxation.

“At the start of October this year only four out of the top fifteen had done so. I said that this was unacceptable and I gave them a deadline of end of November 2010 to sign up.

“That deadline arrived today and I am pleased to say that all fifteen banks have signed up.

“Alongside the bank levy, this shows that the Coalition Government is taking action to ensure banks pay their fair share – unlike the previous Government, which talked tough, but failed to deliver. “